Nerve growth factor (NGF) is one of the longest known and best characterized of the peptide growth factors acting on the nervous system. It is now recognized as a member of a family of growth factors, called the neurotrophins, now five in number, that supports a wide variety of neural cells. NGF is required for the survival of sympathetic and sensory neurons. It also is involved in the development of several different cell types, including certain neurons in the central nervous system, the chromaffin cells of the adrenal medulla, and a number of tumors, as well. The first step in the action of NGF on these different cells is its binding to a specific, high-affinity receptor, now known to be the protein product of the trk protooncogene. This binding activates the tyrosine kinase activity of trk and initiates a number of intracellular actions that lead to alterations in the phosphorylation and, consequently, the function of key proteins in the cell and to changes in the expression of specific genes. These changes in protein function and in gene expression, caused by the changes in phosphorylation, are the mechanism by which NGF exerts its developmental effects on the cells. Much of the work leading to this concept has been done with the PC12 pheochromocytoma, a cell line derived from a tumor of the rat adrenal medulla. This clonal line continues to be one of the most informative tools available for the study of NGF and a key model for neuronal differentiation in general. In the presence of NGF, PC12 cells stop dividing, elaborate neurites, become excitable, and will synapse with appropriate muscle cells in culture. Indeed, they change from a rapidly-dividing chromaffin cell to a terminally-differentiated sympathetic neuron within a few days. The changes in phosphorylation that underlie these global alterations in phenotype occur in virtually every compartment in the cell. Phosphorylation of NGF-stimulated calcium channels appears to regulate the calcium flux across the membrane and, in turn, the intracellular calcium levels, and these levels surely influence the survival of target neurons and may also regulate the ability of the neuron to withstand environmental insults such as occur in stroke. The NGF-induced phosphorylation of specific transcription factors determines which genes are induced and which are repressed. The role of NGF-induced phosphorylation in the translation of certain NGF-sensitive proteins, such as the epidermal growth factor receptor, is just being explored. Phosphorylation of structural proteins may control the morphological differentiation of neurons. A detailed understanding of the mechanism by which NGF acts will surely illuminate the control of neuronal differentiation and survival. This, in turn, could provide insights into disease states in which neurons either develop inappropriately or die prematurely.